* Nikkei closes down 0.7 pct on the day, sheds 2.1 percent
* Banks hit after govt may ask them to ease Tepco loan
* Utilities down as govt asks them to contribute to Tepco
* Autos, firms with FY2011/12 f'casts post strong gains
* Volume hits 6-week high
TOKYO, May 13 Tokyo stocks fell to a two-week
low in heavy volume on Friday as bank shares tumbled after the
government's top spokesman sparked concerns that banks are
likely to be asked to ease troubled Tokyo Electric Power Co's
Shares in utilities also took a hit, after Japan's
government approved a plan to help Tepco compensate victims of
the crisis at its tsunami-crippled nuclear plant and said other
utilities will be asked to pay annual premiums to help fund
"The government is violating private firms' profits. It has
violated the profits of utilities and now it's trying to lower
the burden for the taxpayer by encroaching on banks' profits,"
said Kiyoshi Noda, chief fund manager at MU Investments.
"Due to this the market is facing a new political risk. The
government does not respect private profits and investors are
reacting badly to the announcement. The impact will be
especially big if the banks are asked to share the burden as the
sums we're talking about are high."
The benchmark Nikkei average closed down 0.7 percent
at 9,648.77, while the broader Topix fell 1.1 percent to
The Nikkei shed as much as 1.7 percent to a session low of
9,552.93 after the government announcement , but steadily
recovered after that.
As investors offloaded their positions in bank and utility
stocks trading volume spiked to the highest since March 30, with
2.83 billion shares changing hands on the Tokyo Stock Exchange's
main board, exceeding an average of about 2.0 billion shares
The market was also jittery due to recent volatility in
commodities, resurfacing worries about Greece's debt problems
and concerns over further tightening in emerging markets after
China lifted bank reserve requirement ratios by 50 basis points
"The comments came at a time when the market was worried
about the cooling of the Chinese economy, a slightly stronger
yen and volatile commodities, so the reaction may have been a
bit over the top," said Nagayuki Yamagishi, a strategist at
Mitsubishi UFJ Morgan Stanley Securities.
Chief Cabinet Secretary Yukio Edano said he expected
financial institutions to be asked to cooperate with helping
Tepco fund compensation.
"As for loans made before March 11, this is still a matter
between private companies and I want to watch what I say. But,
like you said, I don't think it (banks not forgiving any loans
made before March 11) would win the people's understanding," he
told a news conference.
Other investors added that the market was also sensitive
before the release of earnings for both Sumitomo Mitsui Banking
Corp and Mizuho Financial Group Inc earnings
after the market close on Friday.
Shares of Tepco's main creditor bank, Sumitomo Mitsui, fell
3.8 percent to 2,452 yen and Japan's biggest bank by assets,
Mitsubishi UFJ Financial Group shed 2.8 percent to 383
yen. The two banks were the most actively traded stocks by
turnover on the main board.
Among power companies, Tohoku Electric lost 6.9
percent to 1,120 yen and Kansai Electric shed 3.1
percent to 1,571 yen.
NISSAN JUMPS, RESOURCE STOCKS FALL
But Nissan Motor gained 3.5 percent to 823 yen
after it laid out plans for a recovery to pre-quake level
Nissan reported on Thursday a stronger than expected 7.2
percent rise in quarterly operating profit despite Japan's
earthquake and predicted its global output would return to
normal by October. [ID:nL3E7GC14U]
"The general message in the market is that disruption from
the earthquake is gradually stabilising," said Stefan Worrall,
director of equity cash sales at Credit Suisse, but added that
flows were not very strong and that they were short-term and
Nikon surged 6.5 percent to 1,768 yen after it
forecast its net profit to jump 54 percent to 42 billion yen in
the current business year to March 2012 on strong digital camera
demand and further expansion into fast-growing markets.
Commodity stocks extended their losses, with Inpex
shedding 3.9 percent to 541,000 yen, JX Holdings
slipping 1.7 percent to 528 yen and Sumitomo Metal Mining
dropping 3.1 percent to 1,310 yen, hit by ongoing
jitters about volatility in commodity prices.
Decliners outpaced advancing issues by 1,354 shares versus
(Reporting by Antoni Slodkowski; Editing by Edwina Gibbs and